Local Governments Preparing for Possible Raids on Tax Revenue

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Aired 6/12/09

San Diego government officials are concerned the state budget deficit could lead to a raid on local tax revenues. Mayor Jerry Sanders and other elected officials recently met to discuss possible cuts that could come from the state. Sanders also urged people to contact their state lawmakers to speak out against the possible cuts.

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Above: Local editors speak with San Diego Week host Gloria Penner about how local and state budget cuts may affect taxpayers.

GLORIA PENNER (Host): Taxpayers of San Diego, was it just last week that we were warned of drastic cuts in city services because of a budget gap that was growing each day? And then rather quietly, we were told that the $83 million budget gap had been closed by action of the city council on Monday. So, David, how did they achieve this incredible feat?

DAVID ROLAND (Editor, San Diego City Beat): Oh, there seems – there's a lot of sarcasm in your tone on this – on this…

PENNER: No…

ROLAND: …lead-in, Gloria.

PENNER: …you're reading into it. You're reading into it.

ROLAND: Well, a large chunk of it was handled in a lot more noisy and contentious city employee contract negotiation. There was some $30 million gap, a large portion of it, was settled through a – an overall six percent decrease in compensation, overall compensation for city employees pretty much across the board.

PENNER: Umm. So are we going to feel any pain? I mean, we were told you're going to feel some pain.

BARBA: The thing that hasn't really been factored into this yet is the two or – the $2 billion dollars that Arnold Schwarzenegger wants to take out of local budgets coming up with the state budget negotiations. And we're looking at something, $36 million coming out of San Diego and another $24 million, I think, coming out of gas taxes out of – and so that hasn't been factored into this budget at all and that's where it's going to start to hurt.

PENNER: So you're looking ahead, Elisa. At this point, I'm not looking ahead. I'm looking at what is. David?

ROLAND: Well, and I was thinking about this, too. I was thinking, well, how did we – I mean, we – like you say, we were hit with all these dire warnings about budget catastrophe and so I asked the mayor's office in an e-mail yesterday, I said remind me how – what has been cut? What have we lost through all this over the – and – over the past twelve months, it's about a – we've been told, it's about $150 million that has come out of the General Fund of San Diego. And the answer that I got was, you know, the notable cuts came mid-year, last winter in about December, that it was things like, you know, they eliminated the customer service centers where people can go and get city business done, ask questions, whatever, get information. They also eliminated the mayor's Office of Ethics and Integrity, which a lot of people thought should be eliminated anyway.

PENNER: Some people have never actually heard of it.

ROLAND: Right.

PENNER: Yes.

ROLAND: And probably they've never heard of the customer service centers either or – or maybe the fire rings that, you know, that were eliminated. And also the size and number of police and fire recruits in the academies, those were downsized a little bit.

PENNER: Okay, so our number is 1-888-895-5727, 895-KPBS. If you live in the City of San Diego, are you sitting back comfortably this morning and saying, whoosh, you know, I missed that bullet? It's a question of whether you expect that the budget – balanced budget that we now have—I don't even want to say cuts—but the balanced budget that we now have will in any way affect your life negatively or do you feel as though you've gotten a reprieve? Our number again is 1-888-895-5727, 895-KPBS. Chris, let's be a little more specific. Are libraries shutting down?

CHRIS REED (Editorial Board, San Diego Union-Tribune): Well, no. In general, the warnings that we saw are not coming true but the mid-year cuts were very, very significant. And it's also worth pointing out the amazing unanimity of the city council in forcing pay concessions from public employee unions. You know, the city is – by far, the biggest chunk of city spending is on employee compensation, and so it was not minor, it was huge for the city to force concessions on the unions and save so much money there. That's really the key to why the services haven't been cut as drastically as we might have feared. I do need to clarify one thing. When I was raving about the drug war, I'm speaking for myself, not for the San Diego Union-Tribune editorial page.

PENNER: All right, I was waiting for that. But let me go back to you, Chris, on something else. Only Councilman Carl DeMaio voted against the budget, in part because of increased fees and use of reserve money. What fees were increased? Do you know, Chris? Yeah.

REED: Well, as I remember, the big one was they wanted to go after the free trash service and they ended up pulling back on that. So I – I think you're – the way you framed this is exactly right, has what's been done affected the average San Diegan? Not as far as I can tell.

PENNER: Okay, David.

ROLAND: There were – if – I'm going by – off the top of my head on memory here, that I believe there were about – there was about $7 million in fees added as part of the ramp-up to this budget. I don't have – I don't have the list of them in my head but one, for example, using parks, using city parks, various fees for going into city parks, things like that.

PENNER: Will our parking get increased? Do you know if that…

ROLAND: They – they – believe they shot that one down for the moment but I think it's still hanging out there. Now – And I want to add onto something Chris said about the, you know, the unanimity on the employee compensation cuts. I think that was the city council realizing that cuts to city workers had to be part of an overall solution that is still ongoing. Chris mentions the trash tax. I believe that is still – that's still something – or the trash fee, I should say, that's something that's still out there, and same with higher fees for complying with stormwater runoff laws. Those things are still out there and I believe that agreeing to the employee cuts were sort of the deal, ultimately, that will be made that will allow sort of the mayor to fully get behind some more fees.

PENNER: But not everybody at city hall is getting a cut. For example, San Diego councilmember Marti Emerald is being credited for winning a reprieve from pay cuts for council staff members by tapping into reserves for the coming year. Elisa, is that a good thing?

BARBA: Well, she managed to restore like $300,000.00, I think, to the office budgets and they were looking at a across-the-board pay cuts as well for those offices. I think the argument was that a number of those people came into office and they actually took the salaries down of a lot of their office workers from where they were before and I think the sense was that there had been cuts already made and that they needed to go ahead and they needed this. I think – Here's my sense of where we are right now. This is kind of an interim budget. It may be a budget agreement but this is kind of like they've got to first base with this budget, they've made some major cuts to city employees' salaries and things like that. Again, there's going to be a chapter two to this. Right now, they're looking good, they made it to first base, and everybody can congratulate themselves. But there's going to be more pain down the road, and they're just setting themselves up for that.

PENNER: David.

ROLAND: I was going to say, I have called up all these fees that I mentioned. If you want to know some more fees, I can tell you what they are.

PENNER: Okay, well, if we go into that but I'm – Are you saying then that this budget is not good until July 2010, Elisa?

BARBA: I – I think – No, it's going to be changed. It seems to me that this is – it's kind of like a political cover, that they've gotten to this point and they can congratulate themselves but they're going to be – we are inevitably going to be looking at more cuts further down the line and a new budget. I think that's going to have to be revised depending upon what happens with the state budget. So this is a point at which they can say – you know, maybe all the build up with all the deficit and all the cuts that we're going to have, maybe that's what forced the city employees to the table and it forced them to agree to make these big cuts but, again, this is just first base. We've still got to make it all the way around to home.

PENNER: Well, there was a court decision this week that City Attorney Jan Goldsmith said supports our—meaning the city's—legal position at DROP and the retiree medical benefits are not vested rights and that they can be modified or eliminated without a vote of the members. So could that decision potentially reduce the unfunded liability by reducing benefits, Chris?

REED: Well, it potentially wipes out $1.2 billion in unfunded but heretofore promised healthcare benefits for retirees. So if this holds up, and I know there's still pushback from union attorney Ann Smith, who says this isn't being interpreted correctly, but if Goldsmith is right, then San Diego's longterm fiscal picture got way better in – just in a stroke of a judge's pen.

PENNER: And – but you're right, the attorney for the white collar city workers union says that Goldsmith has it all wrong, that the retiree medical benefits in courts were just for the Police Officers Association and that it wasn't a DROP retiree – retirement benefits but the DROP salary that was not vested. David?

REED: You know…

PENNER: Oops. All right, David and then Chris.

ROLAND: I was going to say, you're absolutely right. Those are two issues and we shouldn't conflate them. The retiree healthcare issue is separate from the DROP program, which allows employees to still be making their salary and drawing retiree benefits before they actually retire. Ann Smith says that on the DROP part, it was just – the judge simply commented on the salary part of that is not a vested benefit and the salary can be reduced. That's her point. I don't know. I wasn't in the courtroom when it happened.

PENNER: Right, but that's kind of interesting. It seems like a clear point and that will have to be clarified. And eventually, I guess, we'd have to figure out whether that's going to really help or hurt the city budget. And so what we're going to do now is we're going to come back in just a few minutes. We're going to take a call from Chris in Normal Heights as we continue discussing the city budget, and then we're going to go into what kind of a threat can we expect from the state? This is the Editors Roundtable and I'm Gloria Penner.

[ break ]

PENNER: I'm Gloria Penner and this is the Editors Roundtable. I'm at the roundtable today with Chris Reed, who actually is still at the San Diego Union-Tribune while we're talking with him by phone, and Elisa Joyce Barba from NPR, and from the San Diego City Beat, we have David Roland, and you. We're talking about budgets today. I know that sounds kind of wonky but budgets do affect your way of life and since the City of San Diego passed a balanced budget on Monday, we thought we should at least recognize that. So let's take a call now from Chris in Normal Heights. Hi, Chris, you're on with the editors.

CHRIS (Caller, Normal Heights): You asked whether we feel this at all?

PENNER: Yes. Yes.

CHRIS: I feel it every time I go out on our roads. I'm a native San Diegan and in the 48 years I've lived here, I don't think I've ever seen the roads as cracked and as potholed as they are. You see it in calls to the city council – I mean, to the city. We have a city-owned – city tree on city-owned property blocking the stop sign in our neighborhood. It's been ten days now since we called to try and get it trimmed. You go to Balboa Park, you see more street lamps and the pedestrian lamps not fixed in a timely manner. You see broken water fountains. The library is ordering fewer magazines, fewer books. When the computer terminal goes down, it doesn't get repaired the same day, it takes two or three or four days. So, yeah, I think it affects people in a lot of ways but maybe people don't see it because we're not paying a specific fee. And maybe the draconian solution of all of this is let's charge a fee for everything and then people may finally realize that there's a relationship between the taxes they pay and the services they get.

PENNER: You know, Chris, there is some sense that a trash pickup fee is in our future, and maybe in our near future. How would you feel about that?

CHRIS: Well, the argument's always made, okay, we already pay it through our, quote, general property taxes. The proof in the pudding is going to be for all these people, like your friend Chris whatever his name is, from the Union-Tribune…

PENNER: Chris Reed, R-e-e-d.

CHRIS: Chris Reed…

PENNER: Yes.

CHRIS: …who's always talking about just cut the salaries of all the city workers. Okay, as he has just explained, they started to cut the benefits, maybe they'll cut the – cut the salaries. Let's see in a year or two if all of a sudden our services are a lot better. And then if they aren't, then what's the answer? Everybody work for free?

REED: I need to get in here. The trash collection fee…

PENNER: Well, let me – let me identify who you are.

REED: Okay.

PENNER: This is the other Chris. This is Chris Reed, and he's responding to Chris in Normal Heights. Go ahead, Chris Reed.

REED: The trash collection fee debate is one of the more maddening debates in local politics. I certainly agree with the idea that people shouldn't get anything for free. But what have cities around the United States of America done to deal with the cost of trash collection? They have privatized the service at enormous savings. Look at the studies. The studies show vast savings. So why hasn't San Diego done this? Well, guess why, because of the power of the public employee unions. Now I don't understand why this debate continues to be about should we get something for free or not. Instead, why don't we avail ourself (sic) of an obvious solution?